A fifth of income tax goes straight to funding Britain’s vast benefits bill, new figures show as Tory MPs step up their call for more cuts to welfare.

The average taxpayer now spends more than £1,100 each on benefits, excluding pensions, while a further £370 goes on paying interest on the nation’s debts.

Chancellor George Osborne is coming under Cabinet pressure ahead of this month’s Budget to find more savings from welfare as ministers resist deeper cuts to defence, police and business.

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Official Treasury figures show the average income tax payer sees 22 per cent of the tax go on beneifts

David Cameron yesterday defended cutting benefits, saying the country would not be able to afford to fund care for the elderly if the nation is 'squandering billions on welfare for people who could work'.

Speaking in West Yorkshire, the Prime Minister said there was no ‘magic money tree’ that allowed the Government to spend and borrow more.

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As early as next year, every taxpayer will get a personal annual statement revealing how each pound taken from them by the Revenue is spent.

However a breakdown released in a parliamentary question shows that welfare payments, not including the bill for the state pension, account for 22.4 per cent of income tax paid – worth £1,166.32 for the average worker.

Treasury minister David Gauke revealed debt interest payments amount to 7.1 per cent of income tax bills, or £369.91.

Downing Street has made clear that £3.5billion of extra cuts to welfare were announced in last year’s Autumn Statement, and do not necessarily expect more.

However, Tory MPs believe taking the axe to benefits will be more popular with voters than cutting spending elsewhere.

Mr Osborne will deliver his fourth Budget on March 20, as Cabinet colleagues battle it out to defend their departments from more cuts.

The revelation that one pound in five of our income tax goes on benefits will alarm those demanding the axe between to the welfare state.

Tory MP Robert Halfon said the figures showed the need to cut welfare more

Tory MP Rob Halfon, who obtained the figures, told MailOnline, said: ‘These figures from the government show the astonishing amount of tax low earners are paying for welfare benefits.

‘The Labour party want to impose a further welfare tax on low earners by spending billions more on benefits and oppose every measure the government takes to try to cut low earners’ tax bills.

‘These figures are why we need to continue to reform welfare urgently.’

Mr Halfon warned against increasing public spending in any areas, adding: ‘We should reallocate existing spending on tax cuts, for cutting fuel duel duty for example.’

In a major speech on the economy yesterday, Mr Cameron refused to change course but hinted at further welfare cuts.

He rejected the accusation from opponents, including the Labour party, that the government is ploughing ahead with austerity to make 'the numbers add up with no care whatsoever for what it means for people affected by the changes we make'.

The Prime Minister said: 'Nothing could be further from the truth. My motives for sticking to the plan are exactly about doing the right thing to help families and business up and down the country.

'Why? Because we want to look after people in their old age, and we won’t be able to do that if we’re squandering billions on welfare for people who could work.

'Because we want to help people into work and break the cycle of poverty, and we’ve seen that ever increasing working-age welfare is not the answer.'

Mr Osborne has faced resistance from senior ministers over demands for more cuts to their budgets from 2015.

Defence Secretary Philip Hammond said at the weekend that there is a ‘body of opinion within Cabinet who believes that we have to look at the welfare budget again’.

He added that he would resist further cuts to the defence budget, and would not offer more troop number reductions in the 2015-16 spending review. Home Secretary Theresa May is also resisting further cuts to her budget.

Mr Osborne is understood to be 'relaxed' about Cabinet ministers 'fighting it out amongst themselves' over where future spending cuts should fall.

A Treasury source said: 'We have been clear that if we want to do less on cutting departments we have to do more on cutting welfare because the overall envelope is set.'

Mr Osborne is under pressure to ease the cost of living. Using 2005 as a baseline, the Consumer Prices Index rate of inflation has risen markedly, according to figures from the Office for National Statistics

However, Business Secretary Vince Cable has broken ranks to suggest capital spending, funded by borrowing, may be needed to kick-start growth.

He told the New Statesman that the Government’s decision to stick to Labour’s plan to cut capital spending was a mistake which had ‘economic consequences’.

Mr Cable said there was now a legitimate debate about whether the Government should ‘borrow more, at very low interest rates, in order to finance more capital spending - building of schools and colleges, small road and rail projects, more prudential borrowing by councils for house building.’

He told the magazine that the strategy ‘does not undermine the central objective of reducing the structural deficit, and may assist it by reviving growth’.

The Prime Minister warned abandoning Plan A would mean interest rates will rise, homes will be repossessed and businesses will go bust

Mr Cable also launched a withering attack on the Tory Right, describing their analysis of Britain’s economic problems as a ‘saloon-bar whine about health and safety inspectors, newts and birds that block new development, bloody-minded workers, equalities legislation and Eurocrats who dream up regulations for square tomatoes and straight bananas.’

He said the coalition had been right to clamp down on spending more broadly in order to restore market confidence in the UK.

The Prime Minister warned abandoning Plan A would mean interest rates will rise, homes will be repossessed and businesses will go bust

However, Mr Cameron used his pre-Budget speech to warn Britain must stick to its deficit reduction programme or risk being plunged ‘back into the abyss’.

'There are some people who think we don't have to take all these tough decisions to deal with our debts,' he said.

'They say that our focus on deficit reduction is damaging growth. And what we need to do is to spend more and borrow more.

'It's as if they think there's some magic money tree. Well, let me tell you a plain truth: there isn't.'Margaret Thatcher understood that a tax cut paid for by borrowed money is no tax cut at all when she said: "I’ve not been prepared, ever, to go on with tax reductions if it meant unsound finance".'

Mr Cameron added: 'So yes, we are doing a great deal to help hard working families. But all of these changes have to be paid for – and they have been paid for.'

The remarks will be seen as a sharp rebuttal to the calls from both Tories and Lib Dems for a change of direction.

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More than 20% of everyone's income tax bill goes straight to benefits, sparking fresh calls for more cuts to welfare